Question

Cash discount received from supplier should debited to:

a. debtor's a/c
b. cash discount
c. cash a/c
d. supplier a/c​

Answer 1

Answer:

d. supplier a/c is right answer.

Answer 2

Answer:

Option a. Debtor's a/c is the correct answer.

Explanation:

A debtor is a organization or person who owes money. If the debt is withinside the shape of a mortgage from a economic institution, the debtor is called a borrower, and if the debt is withinside the shape of securities—together with bonds—the debtor is called an issuer.

             Legally, a person who documents a voluntary petition to claim financial disaster is likewise taken into consideration a debtor.

There are two types of discounts given to buyers. One is a trade discount and the other is a cash discount.

• Transaction/trade discounts are not recorded on the books.

• Instead, they are usually granted at the time of sale, as with bulk purchases.
• Therefore, the purchase amount is reflected in the book as a net trade discount.
• A cash discount is given as an encouragement for early payment.
• It is accounted for as an income statement income.

• Initially, the purchase will appear at full price.
• Payables are reduced by the cash discount received.

• Any discounts received are recorded as income in the buyer's books.
• Therefore, it will be credited when a reservation is made on the book.

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